Sunday, December 11, 2016

Every road in every city bustles with traffic - with the
increasing no. of vehicles, congested roads, speed, recklessness, urbanization,
transport vehicles – accidents on the road are common place.

Many of us have
seen some accidents – death and injuries are not to be construed at medico
legal phenomena alone. There are many profound psychological and social
consequences apart from the death or the injuries. The sufferings can seldom be
quantified in financial terms. More significant would be the horrific trauma
caused to those bereaved by the sudden, unexpected snatching away of the bread
winner. Motor Insurance is compulsory ~ all vehicles on public road should
compulsory have insurance – not a policy covering the vehicle or its owner but
some, which are stated in the Motor Vehicles Act itself.

In days of yore, to
give effective rights to the person injured or expired in an accident, Fatal
Accidents Act, 1885 was enacted in India. This Act provided only a
procedure and a right of named legal heirs to claim compensation from the
person committing negligence. In 1939, Motor Vehicles Act, a statute
consolidated the laws relating to motor vehicles. This has since been replaced
by MV Act 1988. Motor Accident Claims Tribunal [MACT] have been set up in
accordance with the statute and the injured or the legal representatives of
deceased can file claim application in MACT.

The Motor Vehicles
Act and the setting up of MACT is considered beneficial legislation in nature –
a legislation that has a broader view considering the welfare of
people. MACTs are set up for providing correct and speedy compensation to
the victims of road accidents.

Motor Insurance is compulsory and all vehicles (other than Govt
vehicles) must possess valid Certificate of Insurance. Though Motor constitutes major portfolio of
most Insurers, it is loss prone too.
Over the years, the no. of accidents have risen and so did the quantum
of awards. Perhaps the premium is still
not enough. The TP premium are tariffed
and regulated by IRDA. In Apr 2011, they
had issued a notification reviewing the premium rates of Motor Third party
insurance covers spelling out a specific formula. Recently (Mar 2016) it was observed that the
cost inflation index (CII) had increased by 5.57% over
the previous year, i.e. from 1024 in FY 2014-15 to 1081 in FY 2015-16.Subsequently
the rates were revised upwards.

When there is a road accident – the injured or the legal heirs (if
deceased) file petition before MACT claiming compensation against the vehicle
owner impleading the Insurer also. After
due procedure, the Hon’ble Court passes award against the owner / Insurer and
by virtue of Policy, Insurers effect payment of compensation. Here is a recent instance of a MACT
claim (reported in The Hindu) – whence
the Honble High Court of Madras commented that the work of Officials of Govt
Insurers is detrimental to the interests of the Companies. Here below is the news reproduced :

The Madras High Court Bench
has said that it has every reason to believe that officials of public-sector
insurance companies often collude with claimants in motor accident cases and
let them walk away with huge amounts of money as compensation, without placing
the true facts of the case before motor accident claims tribunals. This is to
the detriment of the insurance companies the officials work for, the court
said. Justice N Kirubakaran made the observation last Friday while passing
interim orders on two appeals lodged by United India Insurance challenging an
award for INR 6.67 lakhs passed by the Tirunelveli Motor Accident
Claims Tribunal in favour of two injured motorcyclists though the offending car
did not have a valid insurance policy on the day of the incident, reported the
local media.

“These appeals would
highlight as to how the public-sector undertakings are functioning and how the
officials are acting negligently and without any responsibility in a manner
prejudicial to the interest of the insurance companies,” the judge said. He
summoned the Chairman-cum-Managing Director (CMD) of United India Insurance to
the court on 22 December to explain the "negligence and carelessness"
of officials which were repeated in motor accident claim cases. The CMD was
ordered to be present in the court along with details of the quantum of money
that had been paid by the insurance company towards third party claims in the
last 10 years. “If insurance companies are going to defend their cases in this
fashion, it would cause losses to the companies which are already incurring
heavy losses in respect of third-party claims running to hundreds of crores of
rupees,” the judge said.

“It is also brought to the
notice of this court that counterstatements are not properly prepared ... and
there is collusion between some of the insurance lawyers and claimants/counsels
and officials of insurance companies prejudicing the rights of those companies.
This aspect has to be looked into very seriously. “This court has every reason
to believe that even the officials of the insurance companies are not properly
giving instructions and are defending the case with design. This kind of
failure or negligence should be curtailed or prevented.”

Insurance policy: During the course of the hearing, the judge
said it was difficult to comprehend how the insurance officials could not have
brought up the fact that the car lacked a valid insurance policy on 5 January
2014 when the accident occurred on Tirunelveli-Kovilpatti Main Road though the
car owner had renewed the expired insurance policy on 7 January. He pointed out
that the tribunal had directed the insurance company to pay INR5.59 lakh to the
injured motorcyclist and INR1.08
lakh to the pillion rider only in the belief that the car had a valid insurance
on the date of accident. Otherwise, the owner of the car would have been
directed to bear the liability of paying the award amount.

The vehicle had hit the
motorcycle, injuring both the rider and the pillion rider. The insurance
company had denied all allegations, except regarding the insurance policy. This
showed how negligently the insurance company officials acted without
responsibility, the court said. "There is no collection of materials to
defend the case of the insurance company whether the vehicle is insured." Utmost
care must be taken to defend the cases when the claim filed involved hundreds
of thousands of rupees, the court said.